EDITORIAL: Another government gas boondoggle

Uncle Sam’s an uninvited guest at every child’s birthday party. The floating balloons that decorate such festivities are filled with helium, a gas that’s coming up scarce thanks to a market-distorting federal government boondoggle that has mostly gone unnoticed. The issue was the subject of a congressional hearing Thursday.

The Interior Department operates a federal helium reserve, which is similar to the strategic petroleum reserve that allows politicians to influence the cost of gasoline. The government’s meddling in helium has caused prices to rise as high-tech enterprises increasingly rely on the gas for things such as semiconductor manufacturing, cryogenics and leak detection. It’s also important for making MRI machines and plasma television sets.

The feds have been involved in helium production since the 1920s, when it got into the business primarily with an eye cast toward military uses. In the 1960s, the government decided to buy 34 billion cubic feet of the stuff from private companies. The wind shifted in 1996 when Republicans took over Congress and ordered the government to get out of the helium business entirely. The Department of Interior is supposed to shut down production facilities and sell most of the supply by 2015. The Government Accountability Office reported the stockpile currently has about 11 billion cubic feet remaining, which is worth $1 billion at the prices set by the Bureau of Land Management (BLM).

Unfortunately, the agency has done a lousy job of setting prices. As the department’s inspector general noted last week, “We found that BLM does not have the expertise needed to identify market value prices for its helium reserve because of its long history of selling helium primarily to Federal buyers and because of the limited number of private companies that currently have access to the Federal Government’s helium supply.”

That’s all the more reason for government to get out of the business. Gary W. Page, president of Helium & Balloons Across America, spoke on behalf of small businesses affected by the shortage. He blamed the lack of competition in the marketplace and unnecessary barriers to access introduced by the bureaucracy. Mr. Page recommended private companies be allowed to “pursue drilling rights for helium wells on federal public lands and not just [view] helium as a byproduct in traditional drilling operations.”

Rep. Doc Hastings, Washington Republican and chairman of the House Natural Resources Committee, introduced legislation to end the reserve by auctioning off the remaining helium. Using market forces is the right approach to solving a problem caused by government intervention and ensures there will be plenty of balloons to go around at the next birthday bash.